Company to Release Final Fiscal Q2 Financial
Results and Conduct Conference Call on November 2nd
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT), a leading provider of
enterprise performance management, carrier service assurance,
cybersecurity, and DDoS protection, today announced preliminary
unaudited financial results for its second fiscal quarter ended
September 30, 2023 and updated its outlook for the full fiscal year
2024. The estimates announced today are subject to change based on
the completion of the Company’s quarter-end review process.
Preliminary Second Quarter Fiscal Year 2024 Results:
- Revenue (GAAP and non-GAAP) is expected to be in the range of
$195 million to $197 million.
- GAAP net income per share (diluted) is expected to be in the
range of $0.28 to $0.30 and non-GAAP net income per share (diluted)
is expected to be in the range of $0.60 to $0.62.
Updated Full Fiscal Year 2024 Outlook:
- Revenue (GAAP and non-GAAP) is anticipated to be in the range
of $840 million to $860 million versus the prior outlook range of
$915 million to $945 million.
- GAAP net income per share (diluted) is anticipated to be in the
range of $0.69 to $0.89 and non-GAAP net income per share (diluted)
is anticipated to be in the range of $2.00 to $2.20, which reflects
approximately 1.1 million shares repurchased during the second
fiscal quarter. This compares with the prior outlook of GAAP net
income per share (diluted) of $0.86 to $0.98 and non-GAAP net
income per share (diluted) of $2.20 to $2.32.
A GAAP and non-GAAP reconciliation of the preliminary second
fiscal quarter results and full fiscal year 2024 outlook is
included in the below financial tables.
Remarks by Anil Singhal, NETSCOUT’s President and Chief
Executive Officer:
“Today, we are announcing preliminary second fiscal quarter
results and updating our full fiscal year 2024 outlook to reflect a
recent slowing in order conversion. We believe this is related to
industry and economic headwinds facing our customers that began to
affect our revenue in the last month of the second fiscal quarter
and is expected to impact the second half of fiscal year 2024. In
consideration of these recent impacts to revenue, we have begun to
take several actions to manage discretionary costs and align
spending with the current environment. These actions should allow
us to reduce the negative impact to our full fiscal year non-GAAP
earnings per share outlook without compromising our longer-term
objectives.
“Entering fiscal Q2, we were optimistic that our recently
released solutions and our solid pipeline of opportunities would
support growth through the balance of the year. However, we
recently began to experience a slowing in demand flow-through as
customers implemented higher spending scrutiny and delayed project
funding. We attribute this primarily to two factors: (1) the widely
publicized capital spending pressures facing the service provider
industry, which NETSCOUT had been relatively insulated from until
recently; and (2) the challenging macroeconomic environment facing
our customers that has created sub-pockets of softness across
multiple enterprise sectors. We will provide additional insight
during our second fiscal quarter financial results call in early
November.
“Longer term, we remain confident in our ability to deliver
sustainable value to our stakeholders and believe we remain
well-positioned with legacy and next-generation solutions across
the portfolio that will continue to play a critical role in
enabling customers to tackle the performance, availability, and
security challenges of the increasingly complex connected digital
world.”
Conference Call Date and
Instructions:
NETSCOUT plans to announce its second-quarter fiscal year 2024
financial results for the period ended September 30, 2023, on
Thursday, November 2, 2023, at approximately 7:30 a.m. ET. NETSCOUT
will host a corresponding conference call and live webcast on the
same day at 8:30 a.m. ET. This call will be webcast live through
NETSCOUT’s website at
https://ir.netscout.com/investors/overview/default.aspx.
Alternatively, investors can listen to the call by dialing (203)
518-9814. The conference call ID is NTCTQ224. A replay of the call
will be available after 12:00 p.m. ET on November 2nd for
approximately one week. The number for the replay is (800) 839-2459
for U.S./Canada callers and (402) 220-7218 for international
callers.
Use of Non-GAAP Financial
Information:
To supplement the financial measures presented in NETSCOUT's
press release in accordance with accounting principles generally
accepted in the United States (GAAP), NETSCOUT also reports the
following non-GAAP measures: non-GAAP gross profit, non-GAAP income
from operations, non-GAAP net income, non-GAAP diluted net income
per share and non-GAAP earnings before interest and other expense,
income taxes, depreciation, and amortization (EBITDA) from
operations. Non-GAAP gross profit removes expenses related to the
amortization of acquired intangible assets, share based
compensation, and acquisition-related depreciation. Non-GAAP income
from operations includes the aforementioned adjustments and also
removes gain on the divestiture of a business, restructuring
charges and legal expenses related to civil judgements. Non-GAAP
net income includes the foregoing adjustments related to non-GAAP
income from operations, and also removes the change in fair value
of derivative instruments, net of related income tax effects.
Non-GAAP diluted net income per share includes the foregoing
adjustments related to non-GAAP net income. Non-GAAP EBITDA from
operations includes the aforementioned items related to non-GAAP
income from operations and also removes non-acquisition related
depreciation expense. Investors are encouraged to review the
related GAAP financial measures and the reconciliation of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures included in the attached tables within this
press release.
These non-GAAP measures are not in accordance with GAAP, should
not be considered an alternative for measures prepared in
accordance with GAAP (gross profit, operating margin, net income,
and diluted net income per share), and may have limitations because
they do not reflect all of NETSCOUT’s results of operations as
determined in accordance with GAAP. These non-GAAP measures should
only be used to evaluate NETSCOUT’s results of operations in
conjunction with the corresponding GAAP measures. The presentation
of non-GAAP information is not meant to be considered superior to,
in isolation from, or as a substitute for results prepared in
accordance with GAAP. NETSCOUT believes these non-GAAP financial
measures will enhance the reader’s overall understanding of
NETSCOUT’s current financial performance and NETSCOUT's prospects
for the future by providing a higher degree of transparency for
certain financial measures and providing a level of disclosure that
helps investors understand how the Company plans and measures its
own business. NETSCOUT believes that providing these non-GAAP
measures affords investors a view of NETSCOUT’s operating results
that may be more easily compared to peer companies and also enables
investors to consider NETSCOUT’s operating results on both a GAAP
and non-GAAP basis during and following the integration period of
NETSCOUT’s acquisitions. Presenting the GAAP measures on their own,
without the supplemental non-GAAP disclosures, might not be
indicative of NETSCOUT’s core operating results. Furthermore,
NETSCOUT believes that the presentation of non-GAAP measures when
shown in conjunction with the corresponding GAAP measures provides
useful information to management and investors regarding present
and future business trends relating to its financial condition and
results of operations.
NETSCOUT management regularly uses supplemental non-GAAP
financial measures internally to understand, manage and evaluate
its business and to make operating decisions. These non-GAAP
measures are among the primary factors that management uses in
planning and forecasting.
About NETSCOUT SYSTEMS,
INC.
NETSCOUT SYSTEMS, INC. (NASDAQ: NTCT) protects the connected
world from cyberattacks and performance and availability
disruptions through the company’s unique visibility platform and
solutions powered by its pioneering deep packet inspection at scale
technology. NETSCOUT serves the world’s largest enterprises,
service providers, and public sector organizations. Learn more at
www.netscout.com or follow @NETSCOUT on LinkedIn, Twitter, or
Facebook.
Safe Harbor
Certain information provided in this press release includes
forward-looking statements within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934, which are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 and other federal securities laws.
Examples of forward-looking statements include statements regarding
our future financial performance or position, results of
operations, business strategy, plans and objectives of management
for future operations, and other statements that are not historical
fact. You can identify forward-looking statements by their use of
forward-looking words such as “may,” “will,” “anticipate,”
“expect,” “believe,” “estimate,” “intend,” “plan,” “should,”
“seek,” or other comparable terms. Investors are cautioned that
such forward-looking statements in this press release including,
without limitation, statements regarding NETSCOUT’s preliminary
unaudited financial results for its second fiscal quarter ended
September 30, 2023, its financial outlook for the full fiscal year
2024, that it believes that a slowing in order conversion is
related to industry and economic headwinds facing its customers and
that it is expected to continue to affect its revenue in the second
half the fiscal year, that it will take a number of actions to
manage discretionary cost and align spending with the current
environment, which should allow it to reduce the negative impact on
its full fiscal year non-GAAP earnings per share outlook without
compromising its longer-term objectives, that the slowing in demand
flow-through is attributable to customers implementing higher
spending scrutiny and delayed project funding associated with
primarily to two factors: (1) the widely publicized capital
spending pressures facing the service provider industry, which it
believes it had been relatively insulated from until recently; and
(2) the challenging macroeconomic environment facing its customers
created sub-pockets of softness across several enterprise sectors,
that it is confident in its ability to deliver sustainable value to
its stakeholders and believe it remains well-positioned with legacy
and next-generation solutions that will continue to play a critical
role in enabling customers to tackle the performance, availability,
and security challenges of the increasingly complex connected
digital world, and statements relating to the potential benefit of
a market for the Company’s products and regarding product releases,
updates, and functionality all constitute forward looking
statements that involve risks and uncertainties. Actual results
could differ materially from the forward-looking statements due to
known and unknown risks, uncertainties, assumptions, and other
factors. Such factors include, but are not limited to,
macroeconomic factors and slowdowns or downturns in economic
conditions generally and in the market for advanced network,
service assurance and cybersecurity solutions specifically; the
volatile foreign exchange environment; liquidity concerns at, and
failures of, banks and other financial institutions; the Company’s
relationships with strategic partners and resellers; dependence
upon broad-based acceptance of the Company’s network performance
management solutions; the presence of competitors with greater
financial resources than the Company has, and their strategic
response to the Company’s products; the Company’s ability to retain
key executives and employees; the Company’s ability to realize the
anticipated savings from recent restructuring actions and other
expense management programs; lower than expected demand for the
Company’s products and services; the impacts of epidemics or
pandemics such as COVID-19; and the timing and magnitude of stock
buyback activity based on market conditions, corporate
considerations, debt agreements, and regulatory requirements. The
risks included above are not exhaustive. We caution readers not to
place undue reliance on any forward-looking statements included in
this press release which speak only as to the date of this press
release. We undertake no responsibility to update or revise any
forward-looking statements, except as required by law. For a more
detailed description of the risk factors associated with the
Company, please refer to the Company’s Annual Report on Form 10-K
for the fiscal year ended March 31, 2023, filed with the Securities
and Exchange Commission. NETSCOUT assumes no obligation to update
any forward-looking information contained in this press release or
with respect to the announcements described herein.
©2023 NETSCOUT SYSTEMS, INC. All rights reserved. NETSCOUT and
the NETSCOUT logo are registered trademarks or trademarks of
NETSCOUT SYSTEMS, INC. and/or its subsidiaries and/or affiliates in
the USA and/or other countries.
NETSCOUT SYSTEMS, INC Q2 FY'24 Reconciliation of Preliminary
GAAP Financial Results to Preliminary Non-GAAP Financial Results
(Unaudited) (In millions, except net income per share - diluted)
Q2 FY'23 Q2 FY'24 GAAP & Non-GAAP revenue
$
228.1
~$195 million to ~$197 million
Q2 FY'23 Q2
FY'24 GAAP net income
$
17.4
~$20.5 million to ~$22.0 million Amortization of intangible assets
$
16.1
~$14.2 million Share-based compensation expenses
$
16.5
~$18.4 million Business development & integration expenses*
$
0.1
~Less than $1 million Gain on divestiture of a business
$
-
~($3.8 million) Restructuring charges
$
(0.1
)
-
Total adjustments
$
32.6
~$28.9 million Related impact of adjustments on income tax
$
(8.7
)
~(5.8 million) Non-GAAP net income
$
41.3
~$43.5 million to ~$45.0 million GAAP net income per share
(diluted)
$
0.24
~$0.28 to ~$0.30 Non-GAAP net income per share (diluted)
$
0.57
~$0.60 to ~$0.62 Average weighted shares outstanding
(diluted GAAP)
73.0
~73 million Average weighted shares outstanding (diluted Non-GAAP)
73.0
~73 million *Business development & integration expenses
include acquisition-related depreciation expense **Figures in table
may not total due to rounding
NETSCOUT SYSTEMS, INC
Reconciliation of GAAP Financial Outlook to Non-GAAP Financial
Outlook (Unaudited) (In millions, except net income per share -
diluted)
FY'23 FY'24 GAAP & Non-GAAP
revenue
$
914.5
~$840 million to ~$860 million
FY'23 FY'24
GAAP net income
$
59.6
~$51 million to ~$66 million Amortization of intangible assets
$
64.7
~$57 million Share-based compensation expenses
$
62.0
~$69 million Business development & integration expenses*
$
0.2
~Less than $1 million Gain on divestiture of a business
$
-
~($3.8 million) Change in fair value of derivative instrument
$
1.4
-
Legal expenses related to civil judgments
$
0.5
-
Restructuring charges
$
1.8
-
Total adjustments
$
130.6
~$122 million Related impact of adjustments on income tax
$
(30.7
)
(~$26 million) Non-GAAP net income
$
159.6
~$147 million to ~$162 million GAAP net income per share
(diluted)
$
0.82
~$0.69 to ~$0.89 Non-GAAP net income per share (diluted)
$
2.18
~$2.00 to ~$2.20 Average weighted shares outstanding
(diluted GAAP)
73.0
~73 million to ~74 million Average weighted shares outstanding
(diluted Non-GAAP)
73.0
~73 million to ~74 million *Business development & integration
expenses include acquisition-related depreciation expense **Figures
in table may not total due to rounding
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231016220935/en/
Investors Anthony Piazza Senior Vice President, Corporate
Finance 978-614-4286 IR@netscout.com
Media Maribel Lopez Manager, Marketing & Corporate
Communications 781-362-4330 Maribel.Lopez@netscout.com
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